October 16th, 2019
Over the last few years, the underlying ethical challenges that all of us, on both sides of the philanthropy table, face have surfaced because of far too many abuses and embarrassments in our sector. Sad, indeed. In its most recent issue, the Chronicle of Philanthropy focuses our attention on those ethical dilemmas faced by fundraisers. As most readers know, my own work on philanthro-ethics focuses on the other side, on the ethical responsibilities on the funder side of the table but the issue that stimulated this post goes back a few professional incarnations ago.
As many of you know, before I was on the funder side full time, I had a long run of executive roles on the nonprofit side. Those roles well positioned me for what I have done for the last quarter century as a funder: executives in the nonprofit sector are faced with choices between breadth and depth, the recruitment and support for professionals with great responsibilities with all too few resources, the need to understand competing stakeholders, and balancing the measures of short term successes with long term impact are all the daily work of non-profit CEO’s. Sounds a lot like the issues we funders have as well.
In the early 80’s to mid-90’s, I had CEO responsibilities for many programs with their own facilities. None of them had deferred maintenance funds, most were inadequately designed or too small for their current and projected utilization, or simply needed to be replaced, and the expansion of our system called for several new facilities. This challenge was not unique to the Hillel Foundation – it characterized a huge swath of nonprofit facilities from universities to churches and everything in between. All too many were built in the 40’s, 50’s, and 60’s by institutions so happy to get capital gifts, any capital gifts, that they never planned for or insisted upon the long-term needs of those facilities. But just because it was not a unique problem didn’t make it any less urgent. [Much of this has changed as many more funders are willing to provide much larger capital gifts to all sorts of institutions with greater sophisticated understanding of what longer term needs are.]
In another context, I would be happy to write more extensively about how we, largely successfully, managed this and set up the conditions that would preempt these capital challenges from continuing into the future. Below I mention one. But for this post I would like to tell only about one approach that I found easy to dismiss at the time but wonder how one might respond today.
One day, someone scheduled an appointment to discuss a proposal. This fellow, whose name I have long forgotten, had developed a particular expertise. He facilitated getting bond funding for non-profit organizations, especially those whose size put them below the normal bond radar. While our needs were in the $m’s, he would fold “our” bond request into a much larger public bond offering of a much greater amount. These publicly issued bonds had low interest rates and would provide all of the capital we needed for re-hab and construction projects in one easy step. Universities and hospitals and other large institutions do this all the time; no reason, he argued, why relatively smaller non-profits shouldn’t benefit as well.
But here was the kicker that turned me off immediately: when I pointed out that I couldn’t see how we would be able to repay the bond amounts in a timely manner, he tried to seal the deal by assuring me that the bonds would never really have to be re-paid. If memory serves, he said that bond holders understood the risks when buying the bonds and they would be very unlikely to come after a non-profit like ours for non-payment.
It struck me at the time as more than a bit sleazy and I politely thanked him and let the proposal finds its way to a circular file. Eventually, we did get the capital for most of our projects, and by then the board and I had developed a policy that no capital project would be accepted without an accompanying endowment. [Whatever one thinks about endowments in general, it is clear that facilities have new, predictable, and substantial costs over time that should be accounted for from the very beginning. It was a gutsy but persuasive policy that worked.]
It is now well over 3 decades since that episode. In my current roles which are now restricted to the funder side, I teach about using PRI’s to accomplish philanthropic goals. To remind those who may not be familiar with the term, a Program Related Investment is money taken from the grants side of a foundation’s ledger that can be given with the desire for or expectation of a financial return. That might be an investment in a for-profit firm aligned with the grantmaking mission of a foundation or it can be a loan to a grantee. A straightforward example of a PRI: a non-profit has a short-term cash flow crisis for any number of legitimate reasons. A foundation chooses to lend the non-profit sufficient capital to tide it over at very favorable terms. If the anticipated money comes in to the non-profit, the loan is repaid. A foundation then must re-grant that money within a certain time frame. But should the non-profit not repay the loan, the foundation must reclassify that loan as a “grant” to that non-profit. [There are more technical issues, but for our purposes this example should suffice.]
In thinking about PRI’s, I began wondering if there might be a similarity between a foundation PRI loan and a public bond. Both are for public good, both provide funds that a nonprofit desperately needs, and both carry the risk of non-repayment. [Bonds are rated according to that risk.]
To be sure, there are very different decision-making processes, different stakeholders, and different legal requirements. But in many ways there are more similarities.
Now let it be said that in the example I gave, the sleaze factor was quite relevant. It seemed ethically problematic that the sales pitch so quickly affirmed that one could take these funds and not feel any repayment responsibility. From my perspective at the time, that was an ethical non-starter.
But given what I now know about PRI’s, I wonder: was I so blinded by the sales affect that I ignored the potential effect? Had I underestimated that the bond raters and the bond buyers would do their own due diligence to determine if we would have been worthy? Had I not overlooked the pattern of philanthropic giving that rewards success – had we demonstrated success in our massive [for us] facility projects might that have changed the giving level of current and potential donors, perhaps making those repayment obligations less elusive? Had I applied a sincere but irrelevant ethics screen that delayed much needed upgrades to our facilities and service systems?
Of course, PRI’s were not very evident in those days, and hindsight is… well, you know. During my time in those executive roles, there was a long litany of ethical, moral, and even legal issues that required a clear ethics grounding if I were to do my job responsibly; if my antennae were too sensitive in this area, it was because I required them in many others.
However, ethics, unlike morality, is often choosing between two credible and often legitimate options. I now wonder if I was too quick to see only one.
October 8th, 2019
It is said that if one hears something once, it is an anecdote; if twice, it is coincidence; if thrice, it is evidence. Whether or not that evidence is convincing to researchers or evaluators, three identical conversations within a two-day period does suggest that there is something to talk about.
Last week, I attended the annual Exponent Philanthropy conference. I have lost track of how many of these I have attended – going back to the early years under its prior name Association of Small Foundations – but I can attest that it is always one of the best conferences for funders in which I participate. This year my role was strictly as a participating member so the conversations I am reporting were all serendipitous around dining tables [although, it is only fair to say that those with whom I spoke were aware of my expertise in the family philanthropy area] .
The questions were remarkably aligned: when and how should we engage the next generation in our family philanthropy. It is often a challenge – What is the correct age? How to involve them in decision making? And the like.
Interestingly, the conversations all posited a similar approach. “Let the younger family members research some projects and report back to us.” The arguments were of two sorts: this would be a good educational method and/or it is a way to prove their readiness. When I asked their ages, the next gen folks were all in their 20’s and 30’s. I responded, “so you are giving them homework assignments – but not a vote.” In every other way they are grown-ups, perhaps with careers and families, but in these families they are still given homework assignments and not ready for the grown-up philanthropy table. [“Next Gen” isn’t always age related, by the way. In a few situations in which I have been involved, the “next gen” were in their 60’s and still not given autonomy or a real vote!]
There were a couple of differences in the family situations: in one case, they were concerned that the next gen folks simply didn’t care. Their evidence was that they were not interested in “doing the work” involved. In the other cases, those who spoke to me were concerned that they were sensing some resentment that their offspring were only allowed to propose but not considered full participants in decision making.
When I suggested to each of the family groups that they experiment by giving some discretionary giving authority to their offspring, they all responded as if it was a new idea. This is certainly not a profoundly innovative suggestion; it assumes that folk are much more likely to feel a sense of ownership and responsibility than when they are disenfranchised or implicitly infantilized.
Of course, this approach is not without its challenges: it wouldn’t be a surprise if not every successor agreed with their elders about priorities or style or even values. For those who are the founders, or those who finally got to sit in the decision-seats themselves, these challenges can make them reluctant to let go. Better to stall and hope that, as time goes by, the succession will somehow be pain free. But if families are truly committed to engaging those next generations in their philanthropic commitments, enfranchisement is really the only option. [Yes, I know I am simplifying a whole range of complex family relationships in these few sentences, but the principles are pretty much generic even if their implementation may not be so simple or straightforward.]
The other frequent question has to do with when: If young adults are, generally speaking, old enough, what about teens? Aren’t they used to doing homework? And even be graded for it? Am I really suggesting giving them discretionary privileges over some grantmaking decisions?
Youth philanthropy has become a fast growing subsegment in our field. There are community sponsored teen giving circles and there even courses in high schools where students are given authority over considering and deciding among direct giving proposals. Why not extend that to your family giving as well? The discretionary dollar amount should be smaller, but the conversations and the insights may well prove intriguing, to say the least. After all, we have been reminded this summer that a 16-year-old high school student has had the most eloquent voice in climate change discussions – with more clarity about the existential choices we face than any adult political leader! I suspect that families who want their philanthropy to transition between generations would do well to find their own ways to take their teens seriously.
Now, these comments should not be viewed as the single solution to questions of succession, eligibility, or longevity. As suggested above, every family and every foundation have distinct histories and distinct cultures. And the more people and more generations involved in successor generations the more difficult the enfranchisement process becomes. But sometimes simple proven solutions can make all the difference. For the three families with whom I spoke at Exponent last week, it appears that this single change might well address a growing intergenerational dilemma.[In reviewing this before publication, it seems appropriate to add this postscript. Our field in in the midst of a robust discussion about the legitimacy of transferring wealth between generations or of the continued exercise of privilege that accompanies it. In other settings and posts I can return to these questions of equity. Nevertheless, the issue of engaging successor generations in family decision-making regarding philanthropy even if there is no formal structure can apply regardless of the depth of one’s pockets. These lessons can apply independent of the larger public policy issues we must certainly continue to examine.]
September 12th, 2019
Upon returning from a recent vacation, I saw that the lead article in the current Chronicle of Philanthropy addresses issues of staffing, retention, and compensation in the non-profit sector. This posting, partially revised, from 7 July 2019 speaks to some of those issues and includes a few practical suggestions not mentioned in the Chronicle article. I hope these will be welcome additions to an important discourse. We funders must recognize the essential nature of quality staffing to accomplish the extraordinarily important work we enable. I particularly call your attention to sections #3, 4, 5, and 7.
A colleague recently expressed surprise that I had not submitted a response to an RFP for leadership training for a foundation board that was posted prominently by a national philanthropy organization. I demurred saying that I really am not an expert on “leadership.” The colleague’s response was pretty strong: “Are you kidding? Of course, you are” and went on to remind me of my own career path.
My professional world over the last quarter century has been fully in the area of grantmaking, funder education, and advising funders and families about how to make informed, ethical, and wise decisions. But the colleague reminded me that I have a long history of volunteer leadership roles, and professional work advising and teaching foundation leadership around the world, and, also have held senior executive and supervisory roles. I acknowledged that I had both relevant experience and some well-developed thoughts about leadership.
For what it is worth, I calculated that, over the course of my career, I have served on at least 60 boards and chaired 12. [It is a role I relish and would be delighted to join additional foundation boards.] Moreover, when I was an executive, I supervised many dozens of professionals and organizations around the world. While I am in the autumn of my career and these roles have been reduced, there are some learnings that have emerged along the way – a few of which may be worth sharing here.
1. I learned early on that there are 2 types of leadership – “ascribed” and “earned.” The former emerges out of “position” – and is often top down; the latter is what others attribute to you independent of the formal “position.” One would like to think that one can hold both roles simultaneously, but it doesn’t automatically follow and isn’t easy.
2. Being CEO or a professional supervisor carries a certain authority. Indeed, one has that ascribed position because there is assumed confidence that one can lead a business, organization, or foundation or some part of one. When one does this well, the staff, board, other stakeholders, and peers all respect the culture, style, and vision of the leader. This confidence must be earned. Without it, a leader has power but only ambivalent or reluctant followers or employees.
3. The empowerment and enfranchisement of others is typically the most effective long-term way to earn that respect. Top-down exercise of power or charismatic style may work for a while, but it rarely inspires genuine long-term loyalty or deep-seated respect. And they certainly do not cultivate future leadership and decision making, indispensable attributes for the long-term viability of any business or organization. [If you see me, ask me about my sobering discovery, very early in my career, about the flaws of charismatic leadership.]
4. The courage to stand for values in the face of organizational challenges is often a measure of how deeply a leader is committed to earning that role. Organizational change matters, and is always disruptive, but when those changes are only because it may be popular or because a few more powerful folks demand it, it may be expeditious but rarely efficacious. [A personal note: Much to my real surprise, in recent months several people told me that what they remember most about my various leadership roles – both as a professional and as a volunteer leader – were the times I stood fast on principle, or told “truth to power” – even when it was unpopular or at professionally cost/risk. Those anecdotes have touched me deeply.]
In this context, perhaps it is important to give an illustration: When I became CEO of a regional non-profit based in Chicago in 1982, I learned that not only was my salary low by any comparative local and national standard, but every single staff person’s salary was way below their comparable standards – and those standards themselves were barely manageable. The board thought that they were paying normal salaries. When I demonstrated the discrepancies, they offered to immediately bring my salary up to national norms. I asked if everyone’s salary would be raised and they said no. I refused to accept my increase until the entire staff received an appropriate increase. It took a full year, but it happened. I wonder what kind of leadership credibility I would have had if I had been the only beneficiary of a much-deserved salary correction!!!!
I also insisted that the increase was not to be a one-time bonus but rather an adjustment to everyone’s base salary. Otherwise annual incremental increases would be calculated on a much lower base.
5. If having a moral compass matters a lot, leadership also requires a profound empathy. That empathy needs to be manifest to those whom one leads. In these days of attention to staff retention and cultivation, perhaps two very concrete examples [of many techniques I used] will illustrate:
a. Career Pathing: When I was a CEO or supervisory executive, I offered to meet with every professional every year to help update their resumes. Why? Well, for one, virtually every professional thinks about his/her next career step; I know I did. Why should I begrudge that ambition in others? No, I didn’t want those colleagues to leave but even more I didn’t want them sneaking around thinking they were disloyal. An unintended consequence was that I often learned that many professionals were 80-90% satisfied but one element of their job was really bothering them. By switching that one assignment with another professional with a different set of priorities, both could be more gratified in their work, and remain longer than they originally intended.
b. Professional Development: In the non-profit sphere, personnel is almost always the largest budget line. So, if there are budget pressures, that is the first place to turn. One line that always seemed vulnerable was the one for professional development. Yet I knew that it was invaluable to the long-term strength of any organization as well as to the growth of individuals within it. Therefore, working with board leadership, we moved that item from being a separate budget line to an assured personnel benefit – in the same category as health benefits. It demonstrated our commitment to how important this was and protected it from budget cutters who saw conferences and staff training as a dispensable luxury item.
6. Effective leadership requires another balancing act as well: keeping an eye on the long term while understanding the daily demands on all elements of one’s organization or business. A visionary who only sees the future may appear charismatic but can often undercut those who need to do the work. One who is only committed to the daily organizational needs may be an outstanding Operating Officer, but rarely can lead the organization into the vagaries and potentialities of the future. This combination of skills and attributes is rarely easy, but, when achieved, it is the mark of outstanding and exemplary leadership.
7. Culture is the grout that holds the organizational edifice together. For example, espousing empowerment and then overruling decisions is likely to inspire only safe behaviors and discourage risk taking. Bragging about staff quality and then always hiring from outside for key positions erodes loyalty and casts doubt on your sincerity. Endorsing the need for equity yet continuing to pay differential salaries to women or minorities is suspect at best. When there is a discrepancy in any of these areas, there is an erosion of “earned” leadership that not only weakens the leader but takes a toll on the business or organization as well.
It is trite to say that leadership is both an art and a science. Typically, it is hard not because of our intentions but because of our blind spots – every single one of us has them.
As we look around the world today, we find a resurgence of a destructive, non-empathetic, self-satisfying leadership, and not only here in the USA. Whether because of blind spots or megalomania, they are the wrong kinds of leaders for long term societal thriving, and a counterproductive paradigm of good leadership. Someday, soon I hope, they will be replaced.
In the meantime, whether on the national, local, or organizational level, leadership informed by these insights learned over 5 decades may help advise the next generations of leaders in every sector.
September 11th, 2019
It was 3 years ago when a group of funders and advocacy groups announced the Participatory Grantmaking Initiative. It was founded on a key underlying philanthro-ethical principle – now cleverly articulated in the pithy statement: “Nothing about us without us.”
The initiative reminded funders that our power can distort our perceptions of what real needs are and our judgment about allocation of our funds. Underneath our careful diligence we are susceptible to the very same predispositions and biases as anyone else. If those most directly impacted, or at least those responsible for implementing our initiatives, are not involved in the decisions, how can we be sure that we are acting responsibly or equitably?
As our field has finally recognized, our race and ethnicity [and to a slightly lesser extent, our gender] does not always reflect those we are serving or funding. [By coincidence, this was written but not published before a recent Chronicle of Philanthropy article underscoring this point.] And, unless we are funding elite schools and museums, it is certainly true that our economic status is far removed from the at-risk or at-need populations we aim to serve. It is surely a no-brainer that there are perspectives that need to be in the room and a long overdue corrective to the all too pervasive top down process.
But whose room, what roles, which decisions are far from clear. Should or must decision making extend to the board room? Do potential grantees have a disqualifying conflict of interest if they are also decision makers? [Recusal is an obvious technical answer, but we know that if one is a decision maker, even if one doesn’t vote, her/his presence is there.] And, bottom line, empowerment aside, how do we know that who is in the room actually guarantees greater impact? Therein lies the challenge.
These are difficult questions to ask these days for several reasons:
1. At a time when all questions, yes even in our field, are viewed as political, even asking this question runs the risk of implying that I am opposed to “participatory grantmaking.” So, let me set my record straight: I have been on boards which used variations of this form of grantmaking for a long time – long before the phrase became popular. Unquestionably we did better grantmaking because of having on the ground experts in the room. No question. Moreover, as a philanthro-ethicist, I suspect that several thousand funders who have taken courses or workshops with me can attest that I have been a long-time advocate that there need to be many means of countering the power imbalances intrinsic to our field – sharing decision-making is only one.
2. A more practical challenge is determining which stakeholders should be invited into the room. We have learned from program evaluators that determining which stakeholders need to be heard is often the most challenging part of any evaluation process. If that is hard for professional evaluators, consider the challenge to foundations and other funders who want to do the right thing and include the best informants but have limited resources and time to do that research. How do they avoid the challenges that they may have cherry picked their favorites or overlooked an important group?
3. A more far reaching question is what impact matters. Often in the most intractable systemic issues, funders can have perspectives that local service deliverers cannot have. That doesn’t mean that the service deliverers are wrong – but many of them have demanding claims on their time and resources that don’t allow or justify long term thinking. How one balances those two competing claims is not easy, and the impact measures themselves may compete. At the very least, it should force us to determine which interventions are most in line with our competencies and goals, and at the same time encourage us to help think through how the other needs can best be met.
For example, there is no systemic or societal issue that can be solved by a single intervention or funding approach. There are urgent needs for immediate responses to those who are ill or homeless or hungry or displaced. At the same time, all of those require a responsive public policy that helps ameliorate the underlying issues that a short-term intervention cannot. Funders with a commitment to address systemic issues know that advocacy and inter-sector collaborations are indispensable. It is perfectly reasonable to choose which approach is best for any individual funder, but we are not exempt for doing so with an alignment with those who are addressing the needs we cannot.
Impact measures – and which stakeholders should participate in these decisions – depend very much on where one fits on the continuum.
4. Underneath all of this is the question of the larger role of independent voluntary philanthropy in an open society. If, as many argue with a good deal of historic legitimacy, it is to fill in the gaping gaps that government chooses not to fund, then there is no question that there should be a mandate to engage as many stakeholders as possible in decision making. But if, as many others have argued, private philanthropy is society’s risk capital, not subject to plebiscite or opinion polls, then one might argue that it needs to be as free as possible to take those risks and stakeholders should be informants but not have a veto on funding choices. Of course, those decisions should be done in responsible, ethical, informed, and humble ways, but to take those risks is precisely the unique role that no other institution can play.
To return to the key point: our field, created out of privilege, has a lot to answer for. Whether intentionally or not, we have a long history of not treating our potential grantees as we should and knowing how to understand real needs and equity in making our decisions. Participatory Grantmaking is surely one of the correctives we should make to is to bring stakeholders into the funding process. As we see, even with the best of intentions, that approach is often easier articulated than implemented.
September 2nd, 2019
This post from 2009 still seems to ring true despite all of the attention given to best family foundation practice over the last 10 years.
In my work with family foundations, there are few matters that arise as frequently as the questions of succession. “Who”, “when”, and “if” come up all the time. Sometimes raised by the founder, more often raised by next generations, the all too frequent absence of clarity can be an open or barely hidden source of contention, resentment, and puzzlement which often gets in the way of good and open decision making, and as often taints the well-deserved family legacy of giving.
In the current philanthropy environment, it is crucial to return to core matters such as this. All too often, in the face of books and press which challenge the larger conceptual issues of philanthropy, especially given the economic and political crunch of these times, people are reluctant to raise questions like this. They may feel that their energies should be spent making sure that their philanthropy is effective, or high impact, or transformative, or cutting edge. All of that is valid, but if there is internal disarray or disappointment, it will be hard to get to those other issues in a way that is reinforcing to the family.
No single article can address all of this in depth but from my experience there are a number of issues and bits of advice which can prove helpful.
August 28th, 2019
This post is another that is worth revisiting several years since its first publication. I have made some very modest revisions to account for changes in what I am doing where, but otherwise it is intact. Your thoughts are welcome.
A few weeks ago, a philanthropist friend forwarded an op-ed regarding ethics for funders. [I like to give credit where credit is due, but the source of the op-ed wasn’t included.]
In reading it, I found myself amused – not because the author was off base, but because it was so clearly written by a fundraising expert who was expressing some exasperation with the overreach of some funders. It is quite true that there are ethical limits to what a funder and grantmaker can request and require from a grantee, and it is useful for funders to hear how they are perceived by the other side of the table. But in many ways, the author’s points are too easy and in other other ways do not go deep enough into the ethical and best practice issues between funders and grantees.
I have been teaching funders since 2000, for many years at NYU’s Academy for Funder Education, now at UPenn’s Center for High Impact Philanthropy, and through our own Institute for Wise Philanthropy. In those courses, we spend a great deal of time unpacking this very complex area. This has also been a key topic of interest in several recent conferences of foundations and grantmakers. Here are 10 key points to help funders stay on the right side of right:
1. Power Imbalance Most funders do not willfully or purposely abuse the role of funder although, to be sure, some do and some do egregiously. Most however are simply unaware of the appropriate boundaries and cross them innocently. Most of these transgressions occur because of an insufficient awareness of the implicit power imbalance and the concomitant and enthusiastic willingness of a potential grantee to do whatever possible to encourage a gift or grant.
2. Philanthropy Law Most funders know the basics of philanthropy law but are less clear on their ramifications in their daily application. For but one example, “self dealing”, always illegal, is not the same as “conflict of interest” which is more nuanced and subject to board-determined policy.
3. Law vs Ethics What is legal is not always the most ethical. For example, the law permits a foundation to pay an attorney or investment manager who sits on its board. Many of us in the field feel that this creates ethical dilemmas for a board’s decision-making autonomy. I for one feel strongly that best practice should be to separate those roles – either one sits on the board or is a compensated professional but not both at the same time. This matter has little to do with funder-grantee relations but a great deal about internal foundation decision-making.
4. Interlocking Boards One area about which there is conflicting consensus is the propriety of a foundation staff or board member sitting on the board of a grantee or vice-versa. We have developed some guidelines to help foundations figure out what makes sense for them. Suffice it to say that there should be a clear alignment between grantmaking process and the policy regarding interlocking boards.
5. Honoring Commitments.. Sad to say, too many funders don’t fully grasp that public benefit organizations rely on receiving their grants on the dates promised. They pay staff, rent space, run programs anticipating that income. A grant letter should be viewed as binding on both the grantee and funder. This problem is more typically evident among unstaffed or outsourced foundations, but it should never be. It is a commitment and it is an ethical lapse not to pay on time.
6. Transparency of Procedure. Many of us have written about what transparency might mean in the contemporary grantmaking world; it has become the subject of much debate. One thing which should not be subject to debate is the expectation that a funding organization makes its procedures known and clear. That process can range from stating that no unsolicited proposals will be accepted, or that there are very specific conditions for consideration or anything in between. An organization searching for funding should be able to ascertain in a clear way who is eligible, what information will be required and when, when they can expect to be notified of decisions, etc. There are no ethical mandates that any one way of doing these things is superior to another, but there are very clear ones that processes should be consistent and evident.
There are numerous other important ethics and best practice issues which every funder should address, and in many cases establish foundation policies. But since the issue of funder – grantee relations is the one which precipitated this post and garners the most attention, let’s turn to some of the sticky issues:
7. Funding for Success. The challenge for a funder is to give the most effective amount toward a project or organization to provide the greatest likelihood that the project will succeed – or at least come close to their expectations. One way NOT to do that is to automatically discount any request. Doing so may save a funder money in the short run but may well guarantee mediocrity in the long run. Now, to be fair to funders, non-profits have been known to pad budgets and a funder often has to work hard to figure out what is really necessary or appropriate. But the key to setting the right amount is to be comfortable that the amount given will make the likelihood of success greater. It is also true that inexperienced organizations may ask for too little – or in their naivete don’t realize what will really be necessary. Such miscalculation from a large university or museum is inexcusable; from a small neighborhood center or start-up may be understandable. This organization may well be understaffed and each of the staff has multiple responsibilities. If one thinks their idea or project is worthy, no reason to punish their insufficient training. Help them know what they understated or omitted. While on the surface this may not appear to be an ethical issue, it veers into it if a funder’s funding pattern makes failure or mediocrity likely. It also underscores the need for those who solicit funds to not play games with exaggerated claims and padded budgeting.
8 Staff and Benefits. Another area where funders, mostly innocently, tend to compound a the challenges for non profit success is to have conflicting expectations. How often do we hear funders bemoan the inability of the sector to retain the best and brightest while at the same time putting pressure on hard pressed groups to cut their budgets? If, say, 80% of a budget is staff, what ends up being cut is salary, fringes, or f.t.e.’s. Funders should hold their grantees to standards of personnel practices which they would expect of a quality run organization, and fund accordingly. [While much has been written about overpayment of a few executives in this sector, in fact the issue of underpayment is far more common.]
9.Leading Them On -or, the Walking $ Sign. Site visits are wonderful ways for a funder to learn about an organization. Yet nothing raises the anticipation level higher than the word that “a funder is coming: a funder is coming”. Organizational execs send memos to their staff to the effect: “clean up your room and dress up”. A site visit makes all the sense in the world if there are really open questions about a grant request or as a way to monitor one already given which can be answered best by seeing for oneself. By all means. But funders need to be aware that when they walk into a room they are not simply flies on the wall, but rather the center of attention. People stop what they are doing, or adjust their activities for your benefit. [I could tell so many stories here, but I imagine that any experienced funder has his or her own litany.] If there is no real decision-making or monitoring, or, especially, if you have no real interest in funding a particular place or project, look for less intrusive ways to satisfy your philanthropic curiosity. Your very presence will lead a non-profit into the assumption that you are open to a proposal or have made a decision to fund them.
10. Expectations and Relationship After the Grant is Given. In my experience, this is the area most fraught with potential frustration. Funders should clarify, when a grant is given, what they expect. Whether this has to do with monitoring or evaluation or recognition or any of a long list of other relationship areas, funders have an obligation to not leave a grantee guessing. This will allow a recipient to give you what you want to know – or to determine if you are overreaching. [To take an extreme example, a $10,000 gift to a major university is not going to get a named chair; the same gift to a food pantry may be the largest gift in its history. The responses and expectations should be quite different. Similarly, it is important for funders to set expectations which are proportional to the size of the gift and the abilities of an organization to respond. A hospital or university or major museum should have no problem producing reports in a timely manner; there should be more reduced expectations from a small 2 or 3 person start-up.
This list in no way defines all of the ethical and best practice issues for funders. It is not even the full list of what we cover in working with and teaching funders, and, indeed, in the years since this was first written, the complex issue of equity and inclusion have moved to the center of our discourse. In a subsequent postings, I have explored the charged area of intervention by a funder into the work, mission, or priorities of a grantee. Until then, I invite you to add your topics to this list and to make this a robust discussion so that we can enhance the quality and standards of those who are entrusted with funds to make the world better.
August 14th, 2019
In reviewing posts from the earliest days of this blog, I came upon this piece from January 2008. I invite readers to decide how accurate I was – or wasn’t – 11 1/2 years ago.
This entry is in response to a request from Trista Harris of “new voices in philanthropy” to address this issue. It is also cross referenced on their blog.
In addressing the future of “philanthropic foundations” one is tempted to recall the most quoted generalization about foundations: “you’ve met one foundation, you’ve met one foundation.” While still true for some, it is frankly not as true as foundation folks used to believe. Fads in philanthropy and herd mentality are as evident in our world as in any other. Therefore a few generalizations:
August 13th, 2019
Originally posted on 31 May 2011; slightly revised. Over the years, it has been one of the most read and popular posts and most of it is still quite applicable today.
When this post was first written, it was during my 11th year teaching philanthropists and foundation professionals in special university offerings. This post was one of a series of reflections on a decade of teaching funders at the oldest and most comprehensive university program of its kind. Sadly, NYU’s Academy for Funder Education no longer exists. Happily, UPenn’s Center for High Impact Philanthropy
The very first course I taught was one of the first three offered by NYU’s Center for Philanthropy, and was intended to introduce fundraisers to the other side of the table. It was entitled “Do you want to work in a foundation?” At the time I was still heading a now closed foundation and was able to host the entire course at the elegant offices of that foundation.
Much to the surprise of the then new NYU Center [now closed], a large percentage of the attendees were already working in a foundation and were anxious to build a knowledge base. In subsequent articles and postings, I will expand on what we teach, why, how it has developed over the past decade, and more. However, here, I would like to return to that very first question.
Interestingly enough, that question was quite prescient – albeit in an unintended way… it is in fact a question I am asked, one way or another, on a regular basis. After all, what could be better than giving money away? Surely it must be better to give money than to raise it. What follows are some of the responses I give during these “informational interview” type meetings.
A. Are you temperamentally suited to do this work? This seems like a strange question but many people have unrealistic expectations about what giving money away entails:
Are you prepared to say “no” much more than you can ever say “yes?” Any funder, volunteer or professional, is well aware that one has to reject a very high percentage of requests. [That is true for all of us, but the difference between an individual simply discarding all of the unsolicited fundraising requests and an institutional funder is that many of those requests are consistent with the funder’s stated mission and part of our job. There are simply too many.] This, as most funders will tell you, is much harder and more demanding than it may appear.
Are you prepared to be a walking dollar sign? Once one is identified as being a funder or a gatekeeper, it is absolutely guaranteed that every social event will become an opportunity for a veiled solicitation. Years ago, the day that it was announced that I was going to head a foundation, Mirele and I were at a reception. On the way home, she said, “we had better learn not to become cynical.” All evening people lobbied her to lobby me for their pet projects. I can assure you that to this day, as soon as someone finds out what I do, I am solicited. It may be the first or third paragraph, but it is absolutely predictable that it will happen. One has to have the temperament and judgment to know who is a friend and who is an opportunist [albeit with the very best intentions].
Are you prepared to have someone else take the bow for your success? If you are a responsible foundation professional, your job is to enable someone or some organization do what you are funding. They may thank you, but the credit for the success of the project quite properly should be theirs. Is your ego sufficiently in check so that all of your hard work can be someone else’s reward? If one is used to being the programmer or executive of a non-profit, it is quite an adjustment to assume a supporting cast role [important but still supporting.]
Are you prepared to have almost no measurable way to determine if you are dong a good job? After all, a fundraiser knows that more money was raised or more donors gave. But a foundation professional has little say in how much is given in total each year. And the number of grants given is hardly a measure of the effectiveness of the foundation’s strategy. Ironically, at a time when funders are looking for outcome measures from their grantees, it is at least as difficult to measure the success of a program officer’s work. If you get your satisfaction by meeting or exceeding objective measures, you aren’t likely to find the work of grantmaking to be as gratifying.
Are you comfortable with spending a lot of time doing office work? Much of the work of professional grantmaking involves reading proposals, checking out the non profit, writing up board and staff summaries, and keeping current with the fields in which funding takes place. Only a small percentage is “out there”.
B. These questions are not to discourage but to add a bit of reality to what is often a too romanticized career. If though, you feel that these questions still leave you excited, there are some additional considerations.
Do you need to work? If you do, planning a career working for a foundation is not a statistically reliable career plan. There are simply too few jobs. But of course they do exist. As this list will show, it is advisable to think more generically than simply looking at traditional private and independent foundations.
The large foundations typically hire those with content expertise, and assume that they will send their staff to our courses, or teach how to be a funder in-house. Very rarely will they look to hire philanthropy generalists. If you want to work in the big-name foundations, the best way is to make sure that your professional and academic training are in line with their giving priorities. Medium and smaller foundations are more likely to hire a generalist, but realistically, only rarely do these positions get posted.
There are many other opportunities to use these generic skills. Big umbrella charities [e.g., United Way, Catholic Charities, Jewish Federations, American Cancer Society, Donor Advised Funds, etc.] all need allocation specialists whose job is quite similar to a foundation program officer. Once the money is raised, these professionals play a crucial role in the effectiveness of these large and well-established organizations.
State and municipal entities have grants programs in arts, humanities, public affairs, etc. which also call for similar skills. [When this was first written, this was more true than today.]
There are a growing number of outsource firms and consulting firms which provide grants management and leadership for funders. Some are full service, others niche players. The skills and competencies which are called for are much the same as a foundation officer, but one step removed.
C. While no one can guarantee a grantmaking position, there are steps one can take to enhance one’s competitive position:
If you are not in the sector, it is very useful to serve on a non-profit board to learn something about the way decisions are made.
Attend public lectures about trends in philanthropy so that one can learn the terms and categories of the field. This is not simply a matter of learning the lingo; it is also demonstrates that the way in which funders approach questions may be quite different than the way other professions do.
Take courses. This recommendation may sound self-serving, but if one’s professional background is close and one’s experience is relevant, taking courses can help round out one’s competitiveness [to say nothing of adding crucial knowledge].
Network. There is no better way to get on short lists of candidates, especially for small to medium sized foundations, than to hear of positions through networking. [Please remember that all the networking in the world won’t help if you don’t have other credentials or relevant experience.]
Win the lottery. The only guaranteed way that you can work in grantmaking is to have your own money.
Is this all sobering? It is supposed to be since so many of those with whom I meet have less than realistic understandings of what they would do all day as full time funders.
Having said that, being a funder, professional or volunteer, can be one of the most gratifying ways in which one can spend one’s life. One can indeed make a difference, usually in small yet meaningful ways, occasionally in larger and influential ways. And one can take pleasure in knowing that, every day, one is helping to shape the character and values of our society. What can be better than that!
August 8th, 2019
If one reads some mailings from our field, from some of our grantees, and from all too many wealth advisors, one might think that philanthropy was and is a byproduct of the US tax system. It wasn’t and isn’t.
It is not even an American invention, as any scholar of religion or ancient history or anthropology can attest. There is no known society that hasn’t had some form of philanthropy or charity or voluntarism, and, for hundreds of years, much of this has been done in structured ways.
But it is true that in America there has been a long-time fascination with the giving history, practices, ethics, and lifestyles of the very wealthy. Their names and the recipients of their largesse with which their names are associated are the stories of legend and fascination. The quirks and foibles and philanthropic aspirations of the Astors or Carnegies or Rockefellers or Fricks or Rosenwalds – or more recently of the Gates or Buffets or Helmsleys or Adelsons or Kochs or Schwartzman or Bloomberg or the Chen Zuckerbergs captivate the attention of many of the remaining 99.5% of society. Their large gifts inspire admiration or anger or jealousy or awe – sometimes all at once.
If one isn’t careful, one may think that these stories are the story of philanthropy in America. But they aren’t. Or to put it more accurately, they are not the most important stories in American philanthropy.
After all, there have always been superrich – royalty, aristocracy, nobility, landed gentry – who controlled resources and people’s lives. One can cross the ponds on either of our shores to see that. [Let me be clear that I am not a fan of the unconscionable divide between the ultra-high net worth beneficiaries of an unjust system that we have in the USA, only that such wealthy people have existed in many places for a long time.] Indeed, what distinguishes American philanthropy is the willingness of the average person to give of his or her own means. The institutions of philanthropy, on the whole, are reflections of that willingness.
If one looks at the American system, voluntarism was the way in which fire departments were developed. Libraries were early attempts to democratize literacy – funded by voluntary contributions. Hospitals, certainly those that existed before the last century, were almost universally begun and supported by faith based or ethnic defined populations, not by taxes or insurance. Even education in general is still not perceived by many as essentially an obligation of the society [read “government”] – leading to massive personal debts for higher education and the controversial charter school movement for the El-Hi levels. But the policy implications of those realities were not typically front-page stories but relegated to academia or field of interest groups.
Therefore, while philanthropy infuses everyday life, for most people it has meant voyeuristic sightseeing of the lifestyles and largesse of the very rich and powerful. They distinguished it from their charitable giving at Church or rent parties or little tin charity boxes at the corner store.
Something has changed and it is important, I think, to talk about those changes and their implications.
1. Unintentional to intentional. As a rule, it is fair to state that philanthropic behavior, until this century, was the unintended consequence of public policy. To take only one example, the safety net of social security permitted funders to, implicitly, feel that there is no requirement that personal giving is the only place at-risk populations can turn. It meant that a funder might well choose to redirect his or her giving to other causes of more personal interest. Another example is the almost universal dependence of public schools on private funding for their arts or cultural activities or class trips. In other words, municipalities no longer feel the need to build in funding for these activities. It doesn’t take much imagination to see that those municipalities with wealthier parents and alumni are likely to provide more co-curricular opportunities than those in poorer areas.
That began to change incrementally during the time when taxes became a dirty word, but the intentionality became very overt during the Bush-Cheney presidency. For one example, after the disastrous and deadly Hurricane Katrina, the first response was not government mobilization but rather the mobilization of Bush Sr. and Bill Clinton to go raise private funds. The tragedy of that approach has been well documented, but for our purposes, it was an important statement about that administration’s view about which sector had what responsibility.
Since then, the role of philanthropy has been a part of every policy and budget decision on the federal, state, regional and local level. It serves to give philanthropy too much power, and, ironically ,far too much responsibility.
2. The democratization or, perhaps more accurately, the anarchization of philanthropy. One can be stopped on the street, sitting at dinner, opening the mail, watching late-night tv and sure enough we’ll be solicited. And because of how easy it is to start fundraising campaigns or to quickly put up websites, many people find it desirable to give directly, and seemingly, without overhead.
Some of this is very welcome. Giving Tuesday has institutionalized on-line giving and has had a huge impact around the world. A thoughtful individual funder can utilize readily available info from Guidestar [now Candid] or many other accessible and free sites. Doing so may or may not lead to wise giving but is likely to reduce the chance of being scammed. And for those with shallow pockets, it can be very gratifying to support a classroom outing in the US or a village seamstress in Africa rather than have those limited funds go through the purported bureaucracies of intermediaries. Of course, there are scams, there are scandals, and there are predators so the disadvantages of anarchized philanthropy is that it may be hard to be sure that one’s money is going where it is promised especially for those who haven’t yet been taught about how to do it best.
Nevertheless, we are still at the early stages of this technology and the systems to support it and it isn’t going away. It is a game changer, empowering all to make the kinds of direct decisions previously reserved for the few.
3. The concentration of wealth, the sheer size of some gifts, the growth of private/public funds under DAFs all have forced the issue of equitability and equity onto the table. Aside from the tax issues referred to above in 1, there are issues of altruistic folks of privilege determining what is best or irrelevant for those who have less and also of the legitimacy of wealthy folks using their foundations and private giving to distort public policy. There has been a slew of recent book-length commentaries on this issue. Their attitudes range from the essential fallacy of a system that depends on voluntary giving to an attempt to rebalance what philanthropy can, legitimately, be expected to do. What is relevant to us at this time in history is not that there are authors exploring and challenging philanthropic behavior – rather that those authors and those books are getting attention beyond our highly gilded sector and getting read widely. [In this piece, I am not addressing some of my own opinions on this since I have done so in numerous other opinion pieces and in public talks elsewhere.]
4. The emergence of “philanthropy adjacent” approaches available to many. This emerges out of a convergence of some interrelated but separate trends. Here too, I am not necessarily endorsing the underlying thinking behind some of these trends, only articulating them:
a. One emerges from an underlying skepticism toward the NFP sector model’s ability to succeed. This approach argues that without a motivation for personal gain, the creativity and long-term commitment to make real change can never be sustained. Therefore, the real solution to long term societal challenges is to develop alternative models where the owner or investor can “do well by doing good.”
b. A corollary of that is the recognition that most ngo/nfp organizations can never have access to the capital necessary to reach the scale to have the impact an “investor” would demand – that traditional “donors” might not. For-profit business, even when B-corps or ESG approved, have access to capital markets that the nfp/ngo sector doesn’t.
c. Foundation and other funders come at this from a somewhat different direction. Why, they ask, should only our philanthropic giving reflect our values? If we care about smoking or societal equity or the environment or food insecurity, we should find ways of aligning what we do with our investment money with the same underlying values that we apply to our giving. Impact investing and values screens are increasingly viewed as mainstream.
d. As many of the major investment firms offer some “values based” funds available through their retirement menu, the average investor now has options previously available only to those with deep bench investment advisors.
5. Systemic thinking has forced funders and policy makers to recognize the interconnectedness of so many elements of what must be fixed. A program grant to a local organization may be very useful but it is highly unlikely to get to the source of the problem. Government SNAP programming is by far the most efficient way to address food insecurity in the USA, but it cannot, alone, eliminate the continuing need. Voluntary clean up of a river will be satisfying but unless there are enforced policies about what is dumped into that river, edible fish are unlikely to return.
Understanding of systemic issues requires an ideological and political commitment to some forms of “intersectionality”. Opinions diverge about what that should mean. For some, the word implies a mandate to think broadly about how all decisions are interconnected. For some others, it means “with us or agin’ us.”
Globalism is another component of the systemic. Despite some misguided political voices these days, there is no such thing as a fully independent national economy or polity, and certainly no border protections from environmental degradation. Those in the philanthropy world who are committed to addressing the “systemic” need inevitably to address the “global.”
6. If philanthropy has moved into society’s zeitgeist, there is a danger that there will be two very problematic long-term responses:
a. That the visibility of foundations and other large giving will mislead people to think that private philanthropy can ever adequately replace public responsibility. As many $Bs are given buy very generous citizens, those dollars are a mere percentage of what an adequate tax/public system should and can provide. In an anti-government era, this would be disastrous since having human services depend fully on voluntarism would condemn millions to hunger and illiteracy and more.
b. That the attention to private philanthropy will lead to severe restrictions on it. The “closing of civil society” seen in so many places around the world, including the USA, might limit all citizens from exercising advocacy and free speech rights we should still cherish. Philanthropy should indeed be subject to a certain public interest transparency, but we should work very had to make sure that independent decision making is not restricted along the way.
Some have argued that we are living in the second Golden Age of Philanthropy. If one argues only from the perspective of UHNW giving, that is true. But in many ways, as the focus of philanthropy moves from aspirational voyeurism to more normal behavior and attention of the many, I would argue that such a characterization misses the point of how radically these changes are . I use the word Zeitgeist to suggest that philanthropy is one of the defining topics of our era in ways never imagined before.
July 8th, 2019
An alert to those who only read my posts for their thoughts on philanthropy. This is another one that deals with politics. If others in the philanthropy world may feel that it leads to increased advocacy, so be it.
Many of you know that one of my life changing experiences was having been in Berlin on 9 November 1989, known widely as the day the Wall came down. I have written about my thoughts on that day in the past; this piece is inspired by the larger context of my visit to Germany that ended on that date.
1989 was the second generation after WWII. Sadly there are deniers today who choose to not believe the facts of the German depravity and culpability that led to the Holocaust of 6 million Jews, and 5 million others, but the Germans knew then [and still do!] that it was not hyperbole, and represented national shame, embarrassment, and an ineradicable blot on their place in history.
My visit was one of many that the then West German government sponsored to demonstrate that they did not ignore this shame and were trying, in the most institutional ways that they could, to internalize their own commitment to “never again.” Our small group were young-ish leaders in the Jewish world of North America. The 3 weeks were exhausting and powerful.
There was no attempt to sugarcoat German history or to claim that it was unrelated to their present. Thus we saw remnants of the Holocaust institutions, the earliest concentration camps and preliminary gas chambers, the memorials, the archives of the shocking official propaganda developed to shape German opinion. And much more.
Because 1989 was just beyond the 50-year anniversary of the Kristallnacht Pogroms, there were exhibits in libraries, schools, town centers, and elsewhere. We saw how grandchildren confronted their grandparents, how people outed themselves as having Jewish relatives that they denied or rejected to protect themselves. Two generations were enough time for people with memory to come clean, and for those who had not yet been born to learn what their unchosen legacy was all about.
The trip, though, was not only about the Holocaust and German culpability. It was very much about how a nation was re-thinking itself, rebuilding itself, contemplating a new world order, and trying to achieve the delicate balance between a history of German excellence in arts, science, literature, education, music, and more – with this abysmal period. [We also visited places that are chapter headings in Jewish thought over a thousand-year period, but that is for another article.]
We learned that German education mandates Holocaust education and even site visits to “camps.” In those days, there were still enough survivors to have presentations in every school by those who could relate their painful and horrific memories.
We also learned, and we are now getting to the essential point of this essay, that soldiers were taught that they must resist immoral, inhumane orders. Just because something is ordered doesn’t mean one should obey, and just because something is legal doesn’t make it right. The military system taught every single soldier of these distinctions. After all, they knew, it wasn’t only a depraved despotic leader that caused these deaths and the suffering of the Shoah, but it could only happen because of those who decided to follow those orders. I am not an expert on military training or how this is or isn’t taught elsewhere in the world, but I confess that I was profoundly moved by a nation that taught its own civil disobedience as the highest form of civic duty.
It is unnecessary to point out the immoral, dishonest, questionably legal actions of the person occupying the seat of the presidency of the United States today. He is certainly not the first despot in history – and sadly he won’t be the last. But we do need to take stock of what allows so many of our fellow citizens to feel that this immorality and dishonesty doesn’t matter. And we do need to take stock of what allows people, wearing uniforms and acting in the name of this country, to do despicable things that we hope they know are wrong.
After WWII we learned that “just following orders” is not a sufficient alibi when ordered to do immoral and inhumane acts. International law has been enacted to insist on that. But what have we not done in the US education system – of the military or of ICE or the police or even of too many everyday citizens – that they feel free to act in such ways or feel supportive of them? It is beneath contempt and brings a blot on the identity of all of us who call ourselves American who believe in the rule of moral law and justice.
And let’s be clear: the issue isn’t whether the correct descriptions of the places where this insanity is carried out are “concentration camps” or “detention camps” or any other nomenclature. That argument is merely a political obfuscation of the terrible and unacceptable actions taking place.
I have no doubt that one day our country, too, will be held accountable in very real ways. I suspect we too will learn, far too late, what West Germany needed to learn in the 50’s, that we prevent immoral behavior by teaching its unacceptability at every level of society. That doesn’t guarantee that there won’t be despotic leaders, but it diminishes the likelihood that their minions will feel empowered to follow inhumane orders for political purposes.
Let us hope.